by Plan takes shape amid 17% decline in Q2 revenues, $7.2 million quarterly net loss
BASSETT, Va. — Bassett Furniture Industries has announced a restructuring plan that will consolidate its two wood furniture plants in Bassett and Martinsville, Virginia, into one primary location supported by a smaller satellite operation. As part of the plan, it also will close its Noa Home e-commerce business that it purchased about two years ago.
The company’s Bassett facility produces solid wood bedroom and dining furniture sold through its BenchMade program. The Martinsville facility has produced dining and other wood furniture available in custom finishes along with some upholstered dining chairs to name several key categories.
The company purchased the Canadian e-commerce furniture retailer Noa Home as part of a strategy to increase the company’s online presence and better engage with consumers that browse and shop furniture online.
It was immediately unclear when the transition will occur and how many workers will be impacted overall.
The company identified these two measures as part of a five-point restructuring plan to right size the company’s cost structure and prepare it for top-line growth that also includes the following:
+ Drive organic growth through its Bassett-branded retail locations, omnichannel capabilities and enhanced customization to expand its dedicated distribution footprint.
+ Optimize inventory and drop unproductive lines.
+ Improve the company’s overall cost structure and invest in the refurbishment of its current store locations.
The restructuring was announced Wednesday along with the company’s financial results for the second quarter and first half ended June 1. It is expected to improve the company’s bottom line by as much as $6.5 million a year.
Second-quarter revenues decreased 17% to $83.4 million, from $100.5 million. During the quarter, it also had a net loss of $7.2 million, or 82 cents per share, compared with income of $2.1 million, or 24 cents per share, in the same period last year.
For the full first half, it reported net sales of $170 million, compared with sales of $208.2 million the same period last year, an 18.3% decrease. During the first half, it had a net loss of $8.4 million, or 96 cents per share, compared with net income of $3.5 million, or 40 cents per share, in the same period last year.
“Bassett Furniture has a long history of weathering economic cycles, such as the inflationary environment and slow housing market we’re experiencing in 2024 — factors that led to soft demand in our second quarter,” said Robert H. Spilman, chairman and chief executive officer. “The business climate has remained difficult through the first six months of this year and may not improve in the near future. Accordingly, we are committed to returning to profitability by running a leaner operation, with priority focus on both our inventory position and the overall cost structure. We believe that our restructuring plan, expected to improve our bottom line between $5.5 million and $6.5 million on an annual basis, coupled with our solid balance sheet, puts us in a position to be a considerably stronger company when customer demand inevitably improves. I’m particularly pleased that our board believes in our ability to improve operations and continue our strong cash generation by increasing our quarterly dividend by 11%.”
For the quarter, the company’s wholesale business generated $31.9 million in revenues, down 14.9% from the $37.4 million reported the same period last year. The segment reported operating income of $5.7 million, compared with $7 million the same period a year earlier.
For the first half, the segment reported $62.8 million in sales, down 18.7% from $77.2 million last year. During the same period, it had operating income of $12.4 million, compared with $16 million the same period last year.
The retail segment had sales of $50.5 million during the quarter, down 16.9% from $60.8 million last year. It also reported an operating loss of $2.2 million, compared to income of $755,000 the same period last year.
For the first half, the retail segment reported sales of $104.2 million, down 17.1% compared with $125.7 million the same period a year earlier. During the same period, it had an operating loss of $3.8 million, compared with income of $2.3 million the year prior.
Overall, the company reported an operating loss of $8.5 million during the quarter, compared with operating income of $2.5 million the same period last year and an operating loss of $10.8 million during the first half, compared with operating income of $5.2 million the same period last year.
Other highlights of the report were as follows:
+ The company said that the $8.5 million operating loss for the quarter included asset impairment charges of $5.5 million and additional inventory valuation charges of $2.7 million.
+ It reported a gross margin of 52.5% which includes the increased inventory valuation charges. Excluding those charges, it would have had a gross profit margin of 55.7%.
+ The company also said it generated $5.8 million in operating cash flow during the quarter.
“Excluding the additional inventory valuation charges that we recorded, we were pleased with another quarter of strong gross margins, despite lower sales,” Spilman said. “The environment for housing remains challenging and consumers are choosing to invest in experiences over their homes, a change from the Covid period. We continue to be disciplined on expenses to improve operating efficiency.”
